Microsoft Layoffs Continue to Hit Xbox Staff Hard

Microsoft is reportedly preparing substantial workforce reductions within its gaming division, with potential layoffs beginning as early as next week.

Bloomberg reports the company is considering "significant" job cuts across its Xbox operations. According to The Verge, Microsoft executives have received briefings about impending Xbox layoffs along with broader company-wide reductions, with sales teams expected to be particularly affected.

Preparing for Next-Gen Console Launch

The gaming division's restructuring reportedly precedes the launch of Microsoft's next-generation gaming consoles. Last week, Microsoft announced a strategic partnership with AMD to develop technology for future Xbox consoles, though no release timeline has been confirmed for the new hardware.

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The Verge also indicates Microsoft is reorganizing its Xbox distribution network in Central Europe, potentially withdrawing operations from certain markets.

Anonymous Microsoft employees speaking to IGN revealed workers are anticipating layoffs, describing the situation as "a matter of timing rather than possibility."

Ongoing Restructuring Efforts

These potential cuts follow Microsoft's extensive restructuring of its gaming division since acquiring Activision Blizzard for $69 billion. The company eliminated 1,900 positions in January 2024, followed by additional reductions including the closure of Arkane Austin (Redfall developer) and Tango Gameworks (Hi-Fi Rush developer). Later in September 2024, Microsoft cut a further 650 gaming staff, and in May 2025 eliminated 6,000 positions (approximately 3% of its total workforce).

In a June 2024 interview with IGN, Xbox head Phil Spencer stated: "I must operate a sustainable business while ensuring growth, which sometimes means making difficult decisions - choices I don't enjoy making but that require leadership."